Analysis of current economic conditions and policy

Employment Growth Up

Figure 1: Nonfarm payroll employment from January release (blue), from February release (red), from March release (black), in thousands, seasonally adjusted. Bloomberg consensus in gray (based upon 206 thousand increase, using March series observation on February employment). Source: BLS, Bloomberg, author’s calculations.

Interesting. Stimulus down, austerity up, unemployment down. Even Menzie has to agree that maybe the government may not play a huge role in decreasing or increasing employment. Sometimes the private sector just needs some time to get back on track.

Anonymous, the U rate is down because of the commensurate decline in labor force participation; otherwise, the U rate would be ~11%.

Federal gov’t spending has not grown largely because of a drawdown in the spending for never-ending imperial wars and for unemployment payments; but that is about to change.

Now per-capita private investment to final sales implies that we are at a cyclical constraint for investment and employment, suggesting that employment has peaked, the U rate has bottomed, real finals sales per capita will decelerate below 1% (long-term average of 2%), and gov’t spending as a share of final sales will hereafter accelerate, owing largely to accelerating growth of drawdown by Boomers on Social Security, Medicare, Medicaid, food stamps, SSI, HUD housing vouchers for low-income elders, etc.

Consequently, there will be little or no incremental gov’t spending for “stimulus” after Boomer drawdown effects and otherwise for unemployment payments, Obummercares/Medicaid, and food stamps for Americans under age 62-65.

Thus, growth of gov’t spending hereafter, apart from spending for additional never-ending imperial wars, will be for subsistence income support for one-third of the US population, if not more, in the years ahead.